+1.84(+0.12%)

-0.66(-1.07%)

-8.50(-0.64%)

-0.21(-1.28%)

-0.00(-0.09%)

Neutral Stance on Crown Castle

On Jun 14, we maintained our Neutral recommendation on Crown Castle International Inc. (CCI), as both its top and bottom lines topped the Zacks Consensus Estimate in the recently concluded quarter.

Why Maintained Neutral?

Higher usage of smartphones and tablets and increased deployment of 4G LTE networks have propelled demand for tower requirement by large carriers. Moreover, the acquisition of NextG Networks Inc. (which comprise 7,000 Distributed Antenna Systems) and the purchase of 7,200 wireless towers from T-Mobile USA have made it the largest wireless tower operator in the U.S.

Crown Castle’s top-line growth is expected to grow by huge margin as moving of equipments from one tower to another is cumbersome, so carriers normally renew these contracts upon expiration, which implies that a high percentage of Crown Castle’s revenue is recurring, hence avoids loss of customers.

Additionally, an expected hike in the annual price by about 3-5%, will further act as a growth catalyst for Crown Castle, going forward. Moreover, such strong catalysts have allowed the company to raise its revenue guidance for fiscal 2013.

However, a highly leveraged balance sheet and the ongoing merger deals between large telecom carriers may act as headwinds for the company, going forward. Moreover, Crown Castle is currently trading at a 52-week high.

Crown Castle carries a Zacks Rank #2 (Buy).

Other Stocks Outlook in Related Industries

Other stocks in this sector like SBA Communications Corp. (SBAC), Equinix, Inc. (EQIX) and American Tower Corporation (AMT) are set to gain from the robust growth of LTE deployments in the upcoming days. These companies are about to declare their fourth-quarter results next month.

Currently, SBA Communications Corp. has a Zacks Rank #2 (Buy) while both American Tower Corporation and Equinix, Inc. have a Zacks Rank #3 (Hold).